WHAT IS THE PROBLEM?
The problem with writing an equity curve algorithm rule within your original strategy is simply the fact that once you turn the strategy off, based on your equity curve rule, it does not continue to generate an equity curve that can be tracked. We want to track the equity curve in it’s purest form as a simple market analysis based strategy without equity curve rules so that equity curve rules can be applied separately.
The money management algorithms watch the original strategy trade in SIM mode and select which LIVE trades to take based on the criteria that it is given based on the research and method you have selected from back testing the setup before LIVE trading.
In the video we show a simple code set for stopping on a drawdown. Once we stop,, there is no way to know how the strategy is doing. We can blindly start the strategy after a certain period of time but that is “shooting form the hip”. What if the strategy continued to under perform while it was turned off?
THE MONEY MANAGEMENT ALGORITHM OPTIMIZATION TOOL
The Money Management Algorithm Optimization tool is one of the tools that is included. It allows you to run an optimization so that you can test which rule works best for your strategy. You can simply optimize from Rule 1-13 (13 tests total) using the default parameters to get a quick idea. It will test each rule on its own and the results can be viewed in the optimization report.
The Optimization Algorithm only tests one rule at a time. The Money Management Algorithms can use any rule and any combination of rules so that more than one rule can be used. For this reason, it is not efficient to run an optimization in the Money Management Algorithms as optimizing Rules 1-12 from 0 to 1, would give you the best combination but would require 8,192 tests, which can be very time consuming. The Optimization Algorithm was created to provide a quick general answer.
The lifetime license includes the open source code for the Money Management Algorithms as well as access to the Members Area.